However, as events from the past month have shown, not only is China not shy to use every weapon in its retaliatory arsenal, but the recent yuan devaluation has been the fastest on record, and even prompted Trump to intervene by warning the Fed to become more activist in response to the Chinese currency that is "dropping like a rock", even halting rate hikes if that's what it takes.

Bloomberg adds that as the world's two largest economies open up a new front in their increasingly acrimonious game of brinkmanship, the consequences could be dire - and ripple far beyond the U.S. and Chinese currencies. Everything from equities to oil to emerging-market assets are in danger of becoming collateral damage as Beijing and Washington threaten the current global financial order.

"The real risk is that we have broad-based unravelling of global trade and currency cooperation, and that is not going to be pretty," said Jens Nordvig, Wall Street's top-ranked currency strategist for five years running before founding Exante Data LLC in 2016. "Trump's rhetoric over the last 24 hours is certainly shifting this from a trade war to a currency war."